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Posted: May 2, 2010 12:01 a.m.

More info needed about Norfolk-Southern railroad

How much would the Norfolk Southern railroad cost to buy? Would ownership of the railroad corridor produce enough revenue to pay for its yearly maintenance and even produce a profit?

Can the city or county get these answers without paying a lot of money or having to first agree to purchase the railroad?

Those were the questions left in the minds of residents who attended Thursday’s two-hour informational meeting at Covington City Hall, though they were also given many answers by presenter Randy Conner, Covington’s grant writer.

Conner gave a detailed PowerPoint presentation to a standing-room only audience, discussing the railroad’s history, why it’s being abandoned and possible future uses for the corridor it sits on.

One of Conner’s most important findings was that, as far as he understood, the railroad had a fee-simple title — in other words it owned the land. Therefore, even if the railroad is abandoned, the land would not revert back to the original landowners, as would happen if the railroad only held an easement on the land.

The presentation was followed by a lively question-and-answer session. The most important question: "How can we learn more?"

Although some figures have been publically discussed, such as an initial $1.8 million purchase price for the 14.9 mile section of track from Porterdale to Newborn, Conner said no real figures are known because the county and railroad have not entered into actual negotiations.

In addition, the fact that the existing railroad corridor could actually produce money has not been previously discussed. Conner said that telecommunication companies actually have to pay the railroad company in order to cross the track with their wires.

"It is my understanding that whoever buys this railroad corridor, the lease would immediately transfer to whoever owns the property. How much is this lease income? Without a letter of interest, they will not give you that information," Conner said.

"The only word used to describe it [the income] is substantial … This rail corridor could pay for itself, but we just do not know at this time."

When asked why the railroad would want to sell it’s property then, Conner said they have no future use for the line, and a lump sum would benefit them.

Just send the letter. Which one?

Officials seemed to agree that in order to learn more, either the city or county would have to send a letter to Norfolk Southern. The question was, would the letter be one of interest, or one of intent. Both terms were used Thursday night, and the difference between the two could be substantial.

Officials said they thought a letter of interest would simply mean the city or county was expressing interest in looking into the railroad purchase further. There would be no binding language, beside perhaps a confidentially agreement, where the city and county would agree not to share any information with third parties.

However, in a phone interview Friday, County Chairman Kathy Morgan said in previous meetings with Norfolk Southern they had told her they required a letter of intent. She said in her mind a letter of intent would imply the county intended to buy the railroad, which means there could be clauses that would require the county to compensate Norfolk Southern should they back out.

Morgan said she would have to check with Norfolk Southern again to see which letter they required, and what each letter would entail.

"If it’s just a confidentiality agreement, no problem. But if it’s a letter of intent, what are the specifics and backup clauses. Is it a non-binding letter of intent? Is there a way to back up without penalty?" she said.

However, Morgan said right now the county has to be focused on the budget process. She expects to check into the letter situation in June or July, once the budget is finished.

While most county commissioners have expressed they are not in favor of pursuing the railroad in the future, District 1 Commissioner Mort Ewing said they have authorized Morgan to gather all of the facts. If she can do that without spending money or obligating the county, she already has the authority to write a letter.

The City of Covington could write a letter, but the city council recently voted not to pursue gathering more information about the railroad. They would have to have another vote in order to change course.

Future Use of Railroad Corridor

In his presentation, Conner said the corridor could be used for many things:

— it could simply sit vacant as is, waiting for future use.

— the rails could be pulled up, the corridor flattened and then the land could be left vacant; essentially forming a dirt trail.

— a paved trail could be built; though this would cost at least $500,000 per mile.

The paved trail would likely be far too expensive at this point. Leaving the railroad alone could be an option, but the land would become overgrown and all of the street crossings would fall into disrepair and need constant fixing.

However, non-profit companies, like Iron Horse Preservation, are able to come in, pull up all the rails, pack down the dirt and possibly, even repair the street crossings, all at no cost. The corridor would be left vacant and would require very little maintenance.

Iron Horse Director Joe Hattrup said they can do this because they sell the metal rails for more than the cost of what it takes them to do the work. This is because, as a non-profit group that enjoys their work, they charge much less than private engineering and construction firms.

In an interview after the meeting, Hattrup estimated that the nearly 15 miles of rails would probably be worth $600,000 in today’s steel market. He said it would cost his company about $265,000 to remove the rails and ties, and another $116,000 to dispose of the ties, which can contain chemicals, in an environmentally legal way.

The cost to repair the street crossings, and remove the street crossing marking would likely make up the remaining $200,000 difference. The whole process would take about five months. Hattrup said a private firm could charge millions for the same work, but his group has more expertise in the area and simply enjoys its work.

However, Hattrup said pulling up the trails before they become overgrown was imperative, otherwise the cost could increase substantially. Hattrup said regardless of whether you pull up the rails people will walk on them, and if you let them become overgrown, people will illegally dump trash on them. He said he’s seen it happen elsewhere.

Conner said he checked with the city’s liability insurance provider, and the firm said that the city’s insurance premiums would not increase — the liability would be small. In addition, the lost tax revenue on the property would be less than $400. Surprisingly, based on a special system for railroad, the state values Norfolk Sothern’s property in Newton County as being worth about $29,000.

However, there could be additional environmental cleanup costs. Ties contain chemicals, railroad brakes contain asbestos that sheds off when brakes are used, and any historical spills could have left hazardous residue. A woman in the audience said she believed a telecommunications company had sued Norfolk Southern and she wondered if that lawsuit would transfer to the county or city.

Some residents who started out opposed said their minds had not been changed. However, Conner and Covington Mayor Kim Carter said they hoped more meetings would be held in the future.

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